U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB/A
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended
November 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from _________________
to __________________
Commission File Number 0-26088
PCT HOLDINGS, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 87-0431483
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
434 OLDS STATION ROAD, WENATCHEE, WASHINGTON 98801
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (509) 664-8000
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes / X / No / /
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by court. Yes / / No / /
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of January 12, 1996,
-----------------------
7,199,309 shares of the Company's Common Stock, par value $.001 per share,
- --------------------------------------------------------------------------
were outstanding.
- ----------------
Transitional Small Business Disclosure Format (check one): Yes / / No / X /
1
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - November 30 and May 31, 1995
Consolidated Statements of Income - Second Quarter and Six Months
Ended November 30, 1995 and 1994
Consolidated Statements of Cash Flow - Second Quarter and Six Months
Ended November 30, 1995 and 1994
Management's Statement and Notes to Consolidated Financial Statements
Supplemental Disclosure of Pro Forma Consolidated Financial Statements
Pro Forma Combined Balance Sheets at November 30 and May 31, 1995
Pro Forma Combined Statements of Income for the Years Ended May 31,
1995 and June 30, 1995, Quarters Ended November 30, 1995 and 1994,
and Six Month Periods Ended November 30, 1995 and 1994
Audited Financial Statements for Morel Industries, Inc., for the
Years Ended June 30, 1995 and 1994 (the entity acquired in the
purchase transaction)
2
<PAGE>
PCT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
NOVEMBER 30 AND MAY 31, 1995
<TABLE>
<CAPTION>
NOVEMBER 30 MAY 31
1995 1995
Assets (unaudited) (audited)
- ----------------------------------- ------------- ----------
<S> <C> <C>
Current Assets
Cash $ 2,143,555 $1,078,637
Receivables 4,449,782 1,075,999
Inventory 6,395,476 4,375,162
Prepaid Expense 134,684 39,721
Other 7,970 278,795
----------- -----------
Total Current Assets $13,131,467 $ 6,848,314
----------- -----------
Net Property, Plant & Equipment 9,952,605 3,008,122
Real Estate Held for Resale 676,253 676,253
Patents, net 984,857 478,092
Costs in Excess of NBV 1,572,415 462,687
Non-compete Agreement 100,000 100,000
Other 403,831 56,444
----------- -----------
Total Assets $26,821,438 $11,629,912
=========== ===========
Liabilities and Shareholders' Equity
- ------------------------------------
Current Liabilities
Bank Line of Credit $ 2,396,031 $ 0
Accounts Payable 3,064,292 1,527,467
Accrued Liabilities 1,107,482 518,065
Current Portion - LTD 263,610 2,448,000
Current Portion - C/L 46,440 51,000
Current Portion - N/P 1,625,000 510,000
Current Portion - Non-Com 35,000 35,000
----------- -----------
Total Current Liabilities 8,537,855 5,089,532
----------- -----------
Long Term Debt, net 5,332,512 319,574
Capital Leases, net 45,048 115,281
Notes Payable, net 419,197 457,644
Non-compete Agreement, net 65,000 65,000
Deferred Rent 1,041,740 128,711
----------- -----------
Total Liabilities 15,441,352 6,175,742
----------- -----------
Shareholders' Equity
Common Stock 17,528,442 11,018,406
Common Stock, Non Voting
Additional Paid in Capital
Accumulated Deficit (6,148,356) (5,564,236)
----------- -----------
Total Shareholders' Equity 10,842,757 5,454,170
----------- -----------
Total Liabilities & Equity $26,284,109 $11,629,912
=========== ===========
The accompanying notes are an integral part of the consolidated financial statements
</TABLE>
3
<PAGE>
PCT HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Income
Second Quarters and Six Month Periods Ended November 30, 1995 and 1994
FORM 10-QSB
<TABLE>
<CAPTION>
Quarters Ended Six Months Ending
-------------------------- ----------------------------
November 30 November 30 November 30 November 30
1995 1994 1995 1994
Unaudited Unaudited Unaudited Unaudited
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
NET SALES $ 3,674,762 $ 2,819,628 $ 7,131,235 $ 5,643,652
COST OF SALES 2,990,826 2,238,286 5,786,301 4,456,610
----------- ----------- ------------ ------------
GROSS PROFIT 683,936 581,342 1,344,934 1,187,042
OPERATING EXPENSES 1,013,835 539,664 1,822,522 1,048,612
----------- ----------- ------------ ------------
LOSS FROM OPERATIONS (329,899) 41,678 (477,588) 138,430
----------- ----------- ------------ ------------
OTHER INCOME AND
EXPENSE
Interest Income
Interest Expense (61,818) (91,974) (106,594) (185,789)
Other 11 18,499 61 48,954
----------- ----------- ------------ ------------
(61,807) (73,475) (106,533) (136,835)
----------- ----------- ------------ ------------
NET LOSS BEFORE FEDERAL
INCOME TAX (391,706) (31,797) (684,121) 1,595
FEDERAL INCOME TAX
----------- ----------- ------------ ------------
NET LOSS FOR THE PERIOD ($391,706) ($31,797) ($584,121) $1,595
=========== =========== ============ ============
PER SHARE OF COMMON ($0.06) ($0.01) ($0.09) $0.00
STOCK
=========== =========== ============ ============
WEIGHTED AVERAGE
SHARES OUTSTANDING
DURING THE PERIOD 6,288,476 3,812,673 6,193,992 3,705,513
=========== =========== ============ ============
The accompanying notes are an integral part of the consolidated financial statements
</TABLE>
4
<PAGE>
PCT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
SECOND QUARTER AND SIX MONTHS ENDED NOVEMBER 30, 1995 AND 1994
FORM 10-QSB
<TABLE>
<CAPTION>
Quarters Ending Six Months Ending
---------------------------- -----------------------------
November 30 November 30 November 30 November 30
1995 1994 1995 1994
Unaudited Unaudited Unaudited Unaudited
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net cash from operating activities $ (1,979,459) $ (347,678) $ (2,721,259) $ (143,944)
------------ ------------ ------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property and equipment (320,777) (141,771) (614,438) (247,382)
Purchase of Patents (450,000)
Other Changes, net (135,417) (209,716)
------------ ------------ ------------ ------------
Net cash from investing activities (456,194) (141,771) (824,154) (697,382)
------------ ------------ ------------ ------------
CASH FLOW FROM FINANCING ACTIVITIES
Payments of Debt and Capital Leases (570,179) (155,080) (642,626) (259,484)
Proceeds from Financing Debt 433,406 155,000 519,656 2,155,000
Change in Working Capital Line of Credit 1,480,000 1,480,000
Payments on notes payable to stockholders (14,501) (25,000) (31,638) (1,517,838)
Sale of common stock 3,118,933 625,202 3,612,304 1,035,202
Other changes, net 35,739 23,750 52,876 49,646
------------ ------------ ------------ ------------
Net cash from financing activities 4,483,398 623,872 4,990,572 1,462,526
------------ ------------ ------------ ------------
NET CHANGE IN CASH 2,047,745 134,423 1,445,159 621,200
Cash, beginning of period 476,051 513,985 1,078,637 27,208
------------ ------------ ------------ ------------
Cash, end of period $ 2,523,796 $ 648,408 $ 2,523,796 $ 648,408
============ ============ ============ ============
Supplemental Schedule of Non-Cash Financing Activities
Acquisition of Subsidiaries involved the following:
Fair Value of assets acquired other than cash $ 10,824,232 $ 10,824,232
Liabilities Assumed (7,424,419) (7,424,419)
Notes Payable Issued (320,000) (320,000)
------------ ------------
Total Non-Cash Financing Activities $ 3,082,813 $ 3,082,813
Payment of note - issuance of stock $ 100,200 $ 100,200
Seller financed purchase of equipment $ 85,600 $ 171,200 $ 105,000
Equipment purchased - capital leases $ 151,074
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
5
<PAGE>
PCT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FORM 10-QSB - NOVEMBER 30, 1995
Management's Statement
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Form 10-QSB instructions and, in the opinion of
management, contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the Company's consolidated financial
position as of November 30, 1995 and 1994, the consolidated results of
operations for the three- and six-month periods ended November 30, 1995 and
1994, and the consolidated statements of cash flow for the three- and
six-month periods ended November 30, 1995 and 1994. These results have been
determined on the basis of generally accepted accounting principles and
practices applied consistently with those used in the preparation of the
company's Annual Report on Form 10-KSB.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting
principles have been condensed or omitted. The financial statements should
be read in conjunction with the audited financial statements and notes
thereto for the years ended May 31, 1995 and 1994, which have been provided
in their entirety in the Company's Form 10- KSB.
The Company entered into an Agreement and Plan of Merger with Morel
Industries, Inc., a Washington corporation ("Morel"), pursuant to which
Morel Acquisition Corporation, a Washington corporation and subsidiary of
the Company formed for the purpose of effecting the acquisition of Morel,
was merged into Morel effective, for accounting purposes, as of November
30, 1995 (the "Merger"). The Company reported this transaction on current
reports on Form 8-K dated September 28, 1995, and November 30, 1995. The
Merger is being accounted for as a purchase. Accordingly, the Company has
provided the appropriate unaudited interim financial information for the
current and historical periods with disclosure guidelines for purchase
accounting. Since the scope of the transaction requires historical audited
financial statements for Morel for Form 8-K financial reporting purposes,
the Company has chosen to include those audited financial statements in
this Form 10- QSB as supplemental disclosure. Accordingly, the financial
statements also should be read in conjunction with Morel's audited
financial statements, and the notes thereto, for the years ended June 30,
1995 and 1994, which are included herein.
The Company also entered into a purchase agreement with Seismic Safety
Products, Inc., a Florida corporation ("Florida Seismic"), pursuant to
which Seismic Safety Products, Inc., a Washington corporation and
wholly-owned subsidiary of the Company, purchased substantially all of
Florida Seismic's assets, subject to certain liabilities, for consideration
consisting of cash and common stock of the Company. The Company reported
this transaction on current reports on Form 8-K dated October 24, 1995, and
November 30, 1995. Because the purchase was completed as of November 30,
1995, the results of the transaction have been included in the
6
<PAGE>
consolidated financial statements of the Company at that date. The
transaction falls below materiality guidelines for supplemental disclosure.
If reported on a proforma basis, assets including equipment and goodwill
would total approximately $572,000, with contract debt of $36,000 and
equity for the issued common stock of $483,000.
The results of operations for the three- and six-month periods ended
November 30, 1995 and 1994 are not necessarily indicative of the results to
be expected for the full year. Also, certain reclassifications have been
made to the balance sheet and the statements of operations and cash flow to
conform to the 1995 presentations.
Computations of Income and Loss per Share
Income and Loss per common and common equivalent share are computed using
the weighted average number of common and common equivalent shares
outstanding during each period reflected in these financial statements.
Common equivalent shares consist of stock options, which are excluded from
the computation if antidilutive. Fully diluted income and loss per share
did not differ significantly from primary income and loss per share in any
period being reported.
The following pro forma supplemental financial information is provided to
reflect the acquisition of a significant subsidiary (Morel) as if acquired
for balance sheet purposes at the end of the latest fiscal period (May 31,
1995) and current interim period (November 30, 1995), and for income
statement purposes at the beginning of the latest fiscal year (May 31,
1995) and current interim periods (quarter and six months ended November
30, 1995). The pro forma adjustments column of the following balance sheets
and income statements reflects the following:
1) Elimination of the equity section of the acquired company and reflection
of the stock issued for the purchase;
2) Recording of the note payable liability to the shareholder holding the
nonvoting common stock;
3) Recording of a net reduction in the fixed assets of $83,770 to record
them at estimated fair market value;
4) Recording of the excess of cost over net book value of assets acquired
in the transaction; and
5) The associated amortization of the excess for the period.
7
<PAGE>
PCT HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA COMBINED BALANCE SHEET - SUPPLEMENTAL DISCLOSURE FORM 10-QSB
MAY 31, 1995 (June 30, 1995 for Morel Ind.)
<TABLE>
<CAPTION>
PCT MOREL Pro Forma COMBINED
HOLDINGS IND. Adjustments
May 31 June 30
-----------------------------------------------------------------------------
1995 1995 1995
Assets: (audited) (audited) (unaudited)
- -------------------------------------- ---------------- --------------- ----------------
<S> <C> <C> <C>
Current Assets
Cash $ 1,078,637 $ 151,825 $ 1,230,462
Receivables 1,075,999 1,521,527 2,597,526
Inventory 4,375,162 936,311 5,311,473
Prepaid Expense 39,721 112,728 152,449
Other 278,795 473,045 751,840
---------------- --------------- ----------------
Total Current Assets $ 6,848,314 $ 3,195,436 $10,043,750
---------------- --------------- ----------------
Net Property, Plant & Equip 3,008,122 6,667,079 (83,770) 9,591,431
Real Estate Held for Resale 676,253 676,253
Patents, net 478,092 478,092
Costs in Excess of NBV 462,687 107,239 562,777
(7,149)
Non-compete Agreement 100,000 100,000
Other 56,444 24,745 81,189
---------------- --------------- ----------------
Total Assets $11,629,912 $ 9,887,260 $21,533,492
================ =============== ================
Liabilities and Shareholders' Equity
- ------------------------------------
Current Liabilities
Bank Line of Credit 968,539 968,539
Accounts Payable $ 1,527,467 $ 1,106,331 2,633,798
Accrued Liabilities 518,065 540,622 1,058,687
Current Portion - LTD 2,448,000 1,001,781 3,449,781
Current Portion - C/L 51,000 51,000
Current Portion - N/P 510,000 200,000 710,000
Current Portion - Non-Com 35,000 35,000
---------------- --------------- ----------------
Total Current Liabilities 5,089,532 3,617,273 8,906,805
---------------- --------------- ----------------
Long Term Debt, net 319,574 2,147,672 2,467,246
Capital Leases, net 115,281 115,281
Notes Payable, net 457,644 457,644
Non-compete Agreement, net 65,000 65,000
Deferred Rent/Taxes 128,711 1,345,784 1,474,495
---------------- --------------- ----------------
Total Liabilities 6,175,742 7,110,729 13,486,471
---------------- --------------- ----------------
Shareholders' Equity 2,600,000
Common Stock 11,018,406 41,600 (41,600) 13,618,406
Non Voting Common Stock 175,000 (175,000)
Additional Paid in Capital 825,938 (825,938)
Accumulated Deficit (5,564,236) 1,733,993 (1,733,993) (5,571,385)
---------------- --------------- ----------------
(7,149)
---------------- --------------- ----------------
Total Shareholders' Equity 5,454,170 2,778,531 8,047,021
---------------- --------------- ----------------
Total Liabilities & Equity $11,629,912 $ 9,887,260 $21,533,492
================ =============== ================
The accompanying notes are an integral part of the pro forma combined financial statements.
</TABLE>
8
<PAGE>
PCT HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA COMBINED BALANCE SHEET - SUPPLEMENTAL DISCLOSURE FORM 10-QSB
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
PCT MOREL Pro Forma COMBINED
HOLDINGS IND. Adjustments
NOVEMBER 30
-----------------------------------------------------------------------------
1995 1995 1995
Assets: (unaudited) (unaudited) (unaudited)
- -------------------------------------- ---------------- --------------- ----------------
<S> <C> <C> <C>
Current Assets
Cash 2,523,796 (380,231) 2,143,565
Receivables 3,002,112 1,447,670 4,449,782
Inventory 5,449,424 946,052 6,395,476
Prepaid Expense 97,068 37,616 134,684
Other 2,386 5,584 7,970
---------------- --------------- ----------------
Total Current Assets $11,074,786 2,056,691 $13,131,477
---------------- --------------- ----------------
Net Property, Plant & Equip 3,482,605 6,553,770 (83,770) 9,952,605
Real Estate Held for Resale 676,253 676,253
Patents, net 984,857 984,857
Costs in Excess of NBV 951,316 621,099 1,551,712
(20,703)
Non-compete Agreement 100,000 100,000
Other 379,926 23,905 403,831
---------------- --------------- ----------------
Total Assets $17,649,743 $ 6,634,366 $26,800,735
================ =============== ================
Liabilities and Shareholders' Equity
- --------------------------------------
Current Liabilities
Bank Line of Credit $ 1,480,000 $ 916,031 $ 2,396,031
Accounts Payable 1,977,638 1,086,654 3,064,292
Accrued Liabilities 513,694 593,788 1,107,482
Current Portion - LTD 208,800 54,810 263,810
Current Portion - C/L 46,440 46,440
Current Portion - N/P 725,000 900,000 1,625,000
Current Portion - Non-Com 35,000 35,000
---------------- --------------- ----------------
Total Current Liabilities 4,986,572 3,551,283 8,537,855
---------------- --------------- ----------------
Long Term Debt, net 3,454,036 1,878,478 5,332,512
Capital Leases, net 45,048 45,048
Notes Payable, net 150,000 269,197 419,197
Non-compete Agreement, net 65,000 65,000
Deferred Rent/Taxes 169,001 872,739 1,041,740
---------------- --------------- ----------------
Total Liabilities 8,869,657 6,571,695 15,441,352
---------------- --------------- ----------------
Shareholders' Equity 2,600,000
Common Stock 14,928,442 41,600 (41,600) 17,528,442
Additional Paid in Capital 800,938 (800,938)
Accumulated Deficit (6,148,358) 1,220,133 (1,220,133) (6,169,059)
(20,703)
---------------- --------------- ----------------
Total Shareholders' Equity 8,780,086 2,062,671 11,359,383
---------------- --------------- ----------------
Total Liabilities & Equity $17,649,743 $ 8,634,366 $26,800,735
================ =============== ================
The accompanying notes are an integral part of the pro forma combined financial statements
</TABLE>
9
<PAGE>
PCT HOLDINGS, INC AND SUBSIDIARIES
PROFORMA COMBINED STATEMENTS OF INCOME
FISCAL YEAR ENDED MAY 31, 1995, AND JUNE 30, 1995, RESPECTIVELY
PCT HOLDINGS, INC., AND MOREL INDUSTRIES, INC.
SUPPLEMENTAL FINANCIAL INFORMATION FOR FORM 10-QSB
<TABLE>
<CAPTION>
PCT MOREL
HOLDINGS, IND., INC.
INC.
YEARS ENDED
May 31, 1995 June 30, 1995 Pro Forma COMBINED
Audited Audited Adjustments Unaudited
------------ ------------ ----------- --------------
<S> <C> <C> <C>
NET SALES $11,035,595 $10,707,838 $21,743,433
COST OF SALES 9,092,157 9,622,768 18,714,925
------------ ------------ --------------
GROSS PROFIT 1,943,438 1,085,070 3,028,508
OPERATING EXPENSES 2,788,940 1,189,553 7,149 3,985,642
------------ ------------ --------------
INCOME (LOSS) FROM OPERATIONS (845,502) (104,483) (957,134)
------------ ------------ --------------
OTHER INCOME AND EXPENSE
Interest Income 74,352 30,844 105,196
Interest Expense (356,360) (267,477) (623,837)
Gain on sale of foundry, net of
income taxes of $151,789
0 323,529 323,529
Merger and Equity Capital Costs (538,040) (538,040)
Other 13,835 13,886 (51)
------------ ------------ --------------
(806,213) 73,010 (733,203)
INCOME (LOSS) BEFORE FEDERAL 0 0 (1,690,337)
TAX
FEDERAL INCOME TAX (DEFERRED) 241,000 105,586 346,586
------------ ------------ --------------
NET INCOME (LOSS) FOR THE YEAR ($1,410,715) $ 74,113 ($1,343,751)
============ ============ ==============
INCOME (LOSS) PER SHARE OF ($0.41) $0.12 ($0.33)
COMMON STOCK
The accompanying notes are an integral part of the pro forma combined financial statements
</TABLE>
10
<PAGE>
PCT HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENTS OF INCOME
Second Quarter Ended November 30, 1995 and 1994
SUPPLEMENTAL DISCLOSURE - FORM 10-QSB
<TABLE>
<CAPTION>
Quarter Ending
-----------------------------------------------------------
November 30 November 30 Pro Forma November 30
1995 1995 Adjustments 1995
Unaudited Unaudited Unaudited
------------- ------------- -------------
PCT MOREL IND. COMBINED
HOLDINGS
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
NET SALES $ 3,674,762 $ 2,761,306 $ 6,436,068
COST OF SALES 2,990,826 2,585,299 5,576,125
------------- ------------- -------------
GROSS PROFIT 683,936 176,007 859,943
OPERATING 1,013,835 320,081 10,352 1,333,916
EXPENSES
------------- ------------- -------------
LOSS FROM (329,899) (144,074) (473,973)
OPERATIONS
------------- ------------- -------------
OTHER INCOME
AND EXPENSE
Interest Income --- --- ---
Interest Expense (61,818) (91,808) (153,626)
Gain on the Sale of --- --- ---
Property
Financing Fee --- (140,000) (140,000)
Other 11 13,939 13,950
------------- ------------- -------------
(61,807) (217,869) (279,676)
------------- ------------- -------------
NET LOSS BEFORE
FEDERAL INCOME TAX (391,706) (361,943) (753,649)
FEDERAL INCOME TAX --- --- ---
------------- ------------- -------------
NET LOSS FOR THE PERIOD ($391,706) ($361,943) ($753,649)
============= ============= =============
The accompanying notes are an integral part of the pro forma combined financial statements.
</TABLE>
11
<PAGE>
PCT HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENTS OF INCOME
Six Months Ended November 30, 1995 and 1994
SUPPLEMENTAL DISCLOSURE - FORM 10-QSB
<TABLE>
<CAPTION>
Six Months Ending
------------------------------------------------------------
November November Pro Forma November 30
30 30 Adjustments 1995
1995 1995 Unaudited
Unaudited Unaudited
------------- ------------- --------------
PCT MOREL COMBINED
HOLDINGS IND.
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
NET SALES $ 7,131,235 $ 5,477,980 $12,609,215
COST OF SALES 5,786,301 5,326,324 11,112,625
------------- ------------- --------------
GROSS PROFIT 1,344,934 151,656 1,496,590
OPERATING EXPENSES 1,822,522 561,569 20,703 2,384,091
------------- ------------- --------------
LOSS FROM (477,588) (409,913) (887,501)
OPERATIONS
------------- ------------- --------------
OTHER INCOME AND
EXPENSE
Interest Income --- --- ---
Interest Expense (106,594) (192,735) (299,329)
Gain on the Sale of --- --- ---
Property
Financing Fee --- (140,000) (140,000)
Other 61 24,151 24,212
------------- ------------- --------------
(106,533) (308,584) (415,117)
------------- ------------- --------------
NET LOSS BEFORE
FEDERAL INCOME TAX (584,121) (718,497) (1,302,618)
FEDERAL INCOME TAX --- --- ---
------------- ------------- --------------
NET LOSS FOR THE PERIOD ($584,121) ($718,497) ($1,302,618)
============= ============= ==============
The accompanying notes are an integral part of the pro forma combined financial statements.
</TABLE>
12
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Morel Industries, Inc.
Entiat, Washington
We have audited the accompanying balance sheets of Morel Industries,
Inc. as of June 30, 1995 and 1994, and the related statements of income,
stockholders' equity, and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Morel
Industries, Inc. at June 30, 1995 and 1994, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
BDO SEIDMAN, LLP
November 8, 1995, except as to
Notes 4 and 9 which date is December 1, 1995
Seattle, Washington
13
<PAGE>
<TABLE>
MOREL INDUSTRIES, INC.
BALANCE SHEETS
<CAPTION>
JUNE 30, 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS (Note 4)
CURRENT ASSETS
Cash $151,825 $636,114
Accounts receivable (Note 3) 1,395,527 1,415,762
Project receivable (Note 8) 126,000 897,656
Inventories (Notes 1 and 3) 936,311 821,021
Prepaid expenses and other 112,728 28,970
- --------------------------------------------------------------------------------
Total Current Assets 2,722,391 3,799,523
PROPERTY AND EQUIPMENT, less accumulated
depreciation (Notes 2 and 3) 6,667,079 2,625,767
RECEIVABLE FROM STOCKHOLDERS --- 111,403
DEFERRED BOND COSTS 24,745 ---
- --------------------------------------------------------------------------------
$9,414,215 $6,536,693
================================================================================
</TABLE>
14
<PAGE>
<TABLE>
MOREL INDUSTRIES, INC.
BALANCE SHEETS
<CAPTION>
JUNE 30, 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Line-of-credit (Note 3) $ 968,539 $ 889,554
Accounts payable 1,106,331 937,286
Accrued expenses 540,622 454,141
Current maturities of long-term debt (Note 4) 1,001,781 103,149
Pre-billed moving expenditures (Note 8) --- 768,500
- --------------------------------------------------------------------------------
Total Current Liabilities 3,617,273 3,152,630
- --------------------------------------------------------------------------------
DEFERRED SALES TAX 144,891 ---
LONG-TERM DEBT, net of current maturities (Note 4) 2,147,672 ---
DEFERRED INCOME TAXES (Note 6) 727,848 681,645
- --------------------------------------------------------------------------------
Total Liabilities 6,637,684 3,834,275
- --------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (Note 9)
Common stock, $100 par value; 2,500 shares
authorized; 416 shares issued and outstanding 41,600 41,600
Common stock, non-voting, $2,000 par value;
2,500 shares authorized; 87.5 shares issued
and outstanding 175,000 175,000
Additional paid-in capital 825,938 825,938
Retained earnings 1,733,993 1,659,880
- --------------------------------------------------------------------------------
Total Stockholders' Equity 2,776,531 2,702,418
- --------------------------------------------------------------------------------
$9,414,215 $6,536,693
================================================================================
See accompanying summary of accounting policies and notes to financial statements.
</TABLE>
15
<PAGE>
<TABLE>
MOREL INDUSTRIES, INC.
STATEMENTS OF INCOME
<CAPTION>
YEARS ENDED JUNE 30, 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
SALES $10,707,838 $ 9,895,578
COST OF SALES 9,622,768 8,327,254
- --------------------------------------------------------------------------------
Gross Profit 1,085,070 1,568,324
OPERATING EXPENSES 1,189,553 1,240,742
- --------------------------------------------------------------------------------
Income (Loss) from Operations (104,483) 327,582
- --------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Interest income 30,844 18,326
Interest expense (267,477) (130,500)
Realized recovery (loss) on investment 28,881 (77,471)
Other expense (13,886) (40,235)
- --------------------------------------------------------------------------------
Total Other Income (Expense) (221,638) (229,880)
- --------------------------------------------------------------------------------
Income (Loss) Before Extraordinary Item (326,121) 97,702
EXTRAORDINARY ITEM, gain on sale of foundry less
applicable income taxes of $151,789 and $988,134
(Note 8) 294,648 1,918,142
- --------------------------------------------------------------------------------
Income (Loss) Before Income Taxes (31,473) 2,015,844
Deferred Income Tax (Provision) Benefit (Note 6) 105,586 (38,708)
- --------------------------------------------------------------------------------
Net Income $ 74,113 $ 1,977,136
================================================================================
See accompanying summary of accounting policies and notes to financial statements.
</TABLE>
16
<PAGE>
<TABLE>
MOREL INDUSTRIES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
Non-voting Additional Retained
Common Common Paid-in Earnings
Stock Stock Capital (Deficit) Total
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, July 1, 1993 $41,600 $175,000 $825,938 $ (317,256) $ 725,282
Net income --- --- --- 1,977,136 1,977,136
- --------------------------------------------------------------------------------------------------------------
BALANCE, June 30, 1994 41,600 175,000 825,938 1,659,880 2,702,418
Net income --- --- --- 74,113 74,113
- --------------------------------------------------------------------------------------------------------------
BALANCE, June 30, 1995 $41,600 $175,000 $825,938 $1,733,993 $2,776,531
==============================================================================================================
See accompanying summary of accounting policies and notes to financial statements.
</TABLE>
17
<PAGE>
<TABLE>
MOREL INDUSTRIES, INC.
STATEMENTS OF CASH FLOW
<CAPTION>
YEARS ENDED JUNE 30 1995 1994
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 74,113 $ 1,977,136
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Gain on sale of foundry (294,648) (1,918,142)
Depreciation and amortization 356,600 112,241
Deferred income taxes (105,586) 38,708
Settlement of stockholder receivable as a bonus 111,403 ---
Changes in operating assets and liabilities:
Decrease (increase) in assets:
Accounts receivable 20,235 (194,725)
Inventories (115,290) (118,583)
Prepaid expenses and other (83,758) (17,096)
Increase (decrease) in liabilities
Accounts payable 169,045 (262,525)
Accrued expenses 86,481 247,960
- -----------------------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Operating Activities 218,595 (135,026)
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale and relocation of foundry 2,508,860 3,336,528
Acquisition of property and equipment (4,492,197) (1,937,427)
Payment of relocation costs (1,963,807) (512,761)
Increase in deferred sales tax 144,891 ---
Increase in receivable from stockholder --- (111,403)
- -----------------------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Investing Activities (3,802,253) 774,937
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in line-of-credit 78,985 89,555
Proceeds from long-term borrowings 3,438,868 ---
Principal payments on long-term debt (392,564) (435,660)
Increase in deferred bond costs (25,920) ---
- -----------------------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Financing Activities 3,099,369 (346,105)
- -----------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash (484,289) 293,806
CASH, beginning of period $ 636,114 $ 342,308
- -----------------------------------------------------------------------------------------------------
CASH, end of period $ 151,825 $ 636,114
=====================================================================================================
SUPPLEMENTAL CASH FLOWS DISCLOSURE:
Cash paid for interest $ 260,733 $ 130,500
=====================================================================================================
See accompanying summary of accounting policies and notes to financial statements.
</TABLE>
18
<PAGE>
MOREL INDUSTRIES, INC.
SUMMARY OF ACCOUNTING POLICIES
NATURE OF BUSINESS Morel Industries, Inc. ("Morel") is a manufacturer
AND SIGNIFICANT of aluminum castings located in Entiat, Washington.
CUSTOMER During 1994, Morel changed its name from Morel
Foundry Corporation to emphasize Morel's expanding
capabilities in machining and powder coat painting.
In 1995 and 1994 sales to a major customer in the
Class 8 truck industry were 75% and 78% of total
sales.
INVENTORIES Inventories are valued at the lower of cost
(first-in, first-out) or market. Work-in-process
is valued at the lower of estimated cost or
market. Estimated cost is derived through an
analysis of historical gross profit margins.
PROPERTY AND Property and equipment is recorded at cost and is
EQUIPMENT depreciated using the straight-line method over
estimated useful lives as follows:
Years
----------------------------------------------
Office equipment 3-7
Foundry equipment 7-10
Building 15-40
----------------------------------------------
Expenditures for repairs and maintenance which
do not extend the useful life of the related
asset are expensed as incurred.
INCOME TAXES Deferred taxes are provided for temporary
differences in the basis of assets and
liabilities for book and income tax reporting
purposes. If it is more likely than not that
some portion of a deferred tax asset will not be
realized, a valuation allowance is recognized.
19
<PAGE>
MOREL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
NOTE 1: Inventories consisted of the following:
Inventories
JUNE 30, 1995 1994
----------------------------------------------------
<S> <C> <C>
Work-in-process $695,411 $593,064
Raw materials 112,538 100,812
Foundry supplies 128,362 127,145
----------------------------------------------------
Total inventories $936,311 $821,021
====================================================
NOTE 2: Property and equipment consisted of the following:
Property and Equipment
JUNE 30, 1995 1994
----------------------------------------------------
Machinery, equipment and
furniture $3,768,755 $2,874,282
Land and building 3,684,314 823,844
Accumulated depreciation (785,990) (1,072,359)
----------------------------------------------------
Net property and equipment $6,667,079 $2,625,767
====================================================
NOTE 3: Morel has a line-of-credit with a bank with
Line-of-Credit interest at the bank's prime rate (9% at June 30,
1995) plus 2%. The agreement allows Morel to
borrow up to the lesser of $1,000,000 or 80% of
eligible accounts receivable as defined by the bank.
At June 30, 1995, $968,539 was outstanding and
$31,461 was available for borrowing. The
line-of-credit is secured by accounts
receivable, inventories and equipment and is
personally guaranteed by the stockholders, see
Notes 4 and 9.
NOTE 4: JUNE 30, 1995 1994
Long-Term Debt
----------------------------------------------------
Industrial revenue bond
payable to a bank with
monthly payments of
$19,252, including interest
at 8.12% through November
2009, secured by land,
building and equipmentng
and personally guaranteed
by the stockholders. $1,953,154 --
----------------------------------------------------
20
<PAGE>
Note payable to a supplier
with quarterly interest
payments of 12% on the
outstanding balance;
principal due February 1996
and 1997, secured by
property and equipment. 277,291 --
Note payable to an
organization with monthly
payments of $1,718,
including interest at 10.5%
through September 2000,
secured by personal
residences and guarantee of
the stockholders. 100,000 --
Note payable to an
individual, interest only at
14% through September 30,
1995, when interest
increases to 15%. Due in
full in March 1996. Secured
by substantially all assets
of Morel and subordinated to
the industrial revenue bond. 500,000 --
Notes payable to suppliers
with monthly payments of
$757 to $44,543 including
interest at 10%. Unsecured
with maturities through
February 1996 318,320 --
Note payable to a supplier
in quarterly installments of
$25,000, plus interest at
12% through May 1995,
unsecured. -- 100,000
Other 688 3,149
-----------------------------------------------------
$3,149,453 $103,149
Less current maturities 1,001,781 103,149
-----------------------------------------------------
Total Long-Term Debt $2,147,672 --
=====================================================
21
<PAGE>
Scheduled maturities of long-term debt as of
June 30, 1995, are as follows:
-----------------------------------------------------
1996 $1,001,781
1997 270,316
1998 100,415
1999 109,207
2000 118,774
Thereafter 1,548,960
-----------------------------------------------------
Total $3,149,453
=====================================================
Morel's line-of-credit and industrial revenue
bond agreements require, among other matters,
that Morel maintain minimum working capital,
tangible net worth and debt to tangible net
worth ratios. Morel was not in compliance with
the covenants at June 30, 1995. In conjunction
with the merger of Morel on December 1, 1995,
the bank provided a waiver of the covenants
through November 30, 1995, and restructured the
covenants through the expiration of the
agreements, see Note 9. Management believes
Morel will be in compliance with the covenants
through June 30, 1996.
NOTE 5: Morel leases equipment and vehicles under
Commitments and noncancelable operating leases. Future minimum
Contingencies lease payments are as follows:
-----------------------------------------------------
1996 $32,336
1997 22,142
1998 5,092
1999 1,796
2000 974
-----------------------------------------------------
$62,340
=====================================================
Rent expense for the years ended June 30, 1995
and 1994, was $57,386 and $66,669.
During the normal course of business, matters
arise which may ultimately subject Morel to
claims and litigation. Management believes that
the resolution of these matters will not have a
material adverse effect on Morel's financial
condition.
22
<PAGE>
NOTE 6: Deferred tax liabilities are comprised of the
Income Taxes following:
-----------------------------------------------------
JUNE 30, 1995 1994
Property and equipment $(1,227,233) $(1,065,361)
Officers' bonus 93,424 47,964
Other 58,502 39,782
Net operating loss
carryforward 347,459 295,970
-----------------------------------------------------
$ (727,848) $ (681,645)
=====================================================
Morel has net operating loss carryforwards of
approximately $1,022,000 with expiration dates
through fiscal year 2010.
The difference between Morel's effective income
tax rate and the statutory rate of 34% consists
of the following:
JUNE 30, 1995 1994
-----------------------------------------------------
Income tax (provision) benefit
at the statutory rate $ 110,881 $ (33,219)
Amortization of goodwill -- (2,487)
Meals and entertainment (3,426) (1,388)
Officer's life insurance (1,869) (1,614)
-----------------------------------------------------
$ 105,586 $ (38,708)
=====================================================
NOTE 7: Morel participates in a multi-employer pension plan
Employee Benefit Plans pursuant to an agreement between Morel and its
employee bargaining unit. Although the plan is a
defined benefit plan, the specific benefit
levels are not negotiated with or known by
Morel. Contributions expense related to the plan
was $36,014 and $29,411 for the years ended June
30, 1995 and 1994. Subsequent to year end,
Morel's collective bargaining agreement expired
and was not renewed. Accordingly, Morel no
longer participates in the multi-employer plan.
Morel has a 401(k) employee benefit plan for
those employees who meet the eligibility
requirements set forth in the plan. Eligible
employees may contribute up to 15% of their
compensation. Morel's annual contribution to the
plan is determined by the board of directors.
Morel made no contributions during the years
ended June 30, 1995 and 1994.
23
<PAGE>
NOTE 8: In 1994, Morel was required to sell its facility in
Sale of Foundry Property Seattle, Washington, to the Port of Seattle (the
Port). Under terms of the sale Morel received
$2,533,000 for the facility and $3,626,000 for
relocation costs. In March 1994, Morel purchased
a facility in Entiat, Washington, and began
operations in Entiat during August 1994.
For financial statement purposes, Morel
recognized an extraordinary gain of $294,648 and
$1,918,142 for the years ended June 30, 1995 and
1994. For tax reporting purposes, Morel retained
its original basis in the assets sold and,
accordingly, did not recognize a taxable gain.
At June 30, 1995 and 1994, Morel was due
$126,000 and $897,656 from the Port for
relocation costs. During the year ended June 30,
1994, Morel billed the Port $768,500 for
relocation costs which had not yet been
incurred, and which are recorded in the
accompanying balance sheet as a liability.
NOTE 9: On December 1, 1995, Morel entered into an agreement
Subsequent Events to merge with PCT Holdings, Inc. (PCTH), in a
transaction expected to be accounted for as a
pooling of interests. PCTH serves as a holding
company for subsidiaries providing sealed
connectors and components, ceramic capacitors
and filters and machined aluminum parts for the
medical, energy, aerospace, communications and
electronics industries.
Morel has reported a loss before extraordinary
item of $362,121 in 1995 and as of June 30,
1995, has a working capital deficit of $894,822.
Additionally, at June 30, 1995, Morel was in
violation of certain debt covenants on the
line-of-credit and industrial revenue bond
agreements. Subsequent to the merger, PCTH
provided Morel with $1 million of working
capital. The proceeds of the loan were used
primarily to repay $500,000 of the industrial
revenue bond. The balance was used to fund
$260,000 of accounts payable, prepayment
penalties of $140,000 and provide working
capital for Morel.
In conjunction with the repayment of the
industrial revenue bond, the bank provided Morel
with a waiver of its debt covenants through
November 30, 1995, and restructured the
covenants through the expiration of the
agreements.
24
<PAGE>
Morel's 1996 operating plan has been developed
to improve operating efficiency and continue to
broaden Morel's revenue base. Additionally, PCTH
has committed to provide Morel with sufficient
working capital until profitable operations are
restored. Although Morel believes that its
operating plan and working capital available
from PCTH will be adequate to meet its 1996
working capital needs and maintain compliance
with the restructured debt covenants, there can
be no assurance that Morel may not experience
liquidity problems because of adverse market
conditions or other unfavorable events.
</TABLE>
25
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview:
The Company's revenues for the three- and six-month periods ended November
30, 1995, were derived from its three operating subsidiaries involved in
the manufacture and sale of electrical connectors and instrument packages
(Pacific Coast Technologies, Inc. ("PCTI")); high quality machined aluminum
and metal parts (Cashmere Manufacturing Company, Inc. ("CMC")); and ceramic
capacitors, filters and feedthroughs (Ceramic Devices, Inc. ("CDI")).
Revenues shown for the three- and six-month periods ended November 30,
1994, were derived from the operations of PCTI and CMC only.
Results of Operations:
Gross revenues for the quarter ended November 30, 1994, versus the same
period in 1995 increased from $2,819,628 to $3,674,762, an increase of
$855,134 or 30.3%. $479,324 of the increase is attributable to CDI, which
was not owned by the Company in the comparable period of the prior year,
leaving a net increase of $375,810, $191,041 (16.6% increase) for PCTI, and
$184,769 (11.1% increase) for CMC. The increase for PCTI was due to
generally higher average activity among its customer base and a much larger
backlog in comparison to the same period in the prior year. Revenue growth
at CMC reflects a steadying of comparative monthly revenues. Gross profit
for the two comparable periods were 20.6% in 1994 versus 18.6% in 1995, a
decrease due primarily to CMC. Management is actively recruiting and
training qualified production employees, particularly machinists, to reduce
turnover and overtime utilization.
Operating expenses increased from $537,664 for the quarter ended November
30, 1994, to $1,013,835 for the same period in 1995, an increase of
$474,171. $142,079 of the increase is due to the addition of CDI. The
balance of the increase, amounting to $332,092, is due in large part to
legal and transaction costs of the recent acquisitions of Morel and Seismic
Safety Products, mentioned previously. Interest expense declined $30,156,
or 32.8%, primarily from reduction of CMC debt in the fourth quarter of
fiscal 1995. The corresponding decline in net income from the above stated
factors totaled $360,000, from a net loss of $31,797 for the quarter ended
November 30, 1994, to a net loss of $391,706 for the quarter ended November
30, 1995.
Gross revenues for the six-month period ended November 30, 1994 versus the
same period in 1995 increased from $5,643,652 to $7,131,235, an increase of
$1,487,583, or 26.4%. The six-month revenue trends follow the same pattern
as the second quarter, in comparison to the prior year. On a consolidated
basis, gross profit decreased from 21.0% to 18.9%, primarily as a result of
the increased cost levels at CMC, and the costs of moving the CMC operation
to a new production facility in Wenatchee. Operating expenses increased
$773,910, from $1,048,612 for the six months ended November 30, 1994, to
$1,822,522 for the same period in 1995, reflecting the legal
26
<PAGE>
and transaction costs noted in the quarterly analysis above and in the
first quarter. Interest expense for the six months declined $79,195, from
reduction of debt at CMC in the prior year.
The corresponding increase in net loss between the six-month period ended
November 30, 1994 and the same period in 1995 reflects the key factors of
the patent litigation, legal and transaction costs noted previously. The
net loss widened to $584,121 (or $0.09 per share) from income of $1,595 (or
$0.00 per share) in the same period of the previous year. Subsequent to the
end of the second quarter of fiscal year 1995, the Company settled the Balo
patent litigation, described in detail in previous filings. The settlement
agreement includes the immediate cessation of all litigation and the
purchase by PCTI of Balo's patented technology.
Liquidity:
At November 30, 1995, total current assets were $13,131,477, total current
liabilities were $8,537,855, for net working capital of $4,593,622, and a
current ratio of 1.54 to 1.0. Comparable amounts at May 31, 1995 were
$6,848,314 of current assets, $5,089,532 in current liabilities, for net
working capital of $1,758,782, and a current ratio of 1.35 to 1.0. Although
the Company continues to experience operating losses and acquisition
transactions requiring working capital and cash to support, the Company has
operational plans to bring each operating subsidiary to some level of
profitability during the remaining six months of fiscal year 1996. There
can be no assurance, however, that this goal will be achieved for any or
all of the Company's subsidiaries. The Company has sold 838,470 shares of
common stock during the second quarter with net proceeds of nearly $3.0
million. The funds were used primarily to satisfy the financing required
for the recent acquisitions of Morel and Seismic Safety Products, and
scheduled reductions of long term debt and working capital. The Company has
also arranged a $600,000 working capital term loan for Morel to support
operations.
The Company has initiated discussions with its primary lender to
renegotiate its lending arrangements for a working capital line. At
November 30, 1995, the Company is not in compliance with a loan provision
providing for a minimum loss of $100,000 for the current and subsequent
quarters. The loan arrangements did not anticipate the non-recurring patent
litigation costs identified previously, or the scope and extent of the
Company's acquisition opportunities and the legal and transactional costs
which resulted from those activities, and the Company is actively exploring
other equity sources. The Company's lender also has indicated its
willingness to evaluate restructuring its lending arrangements. There can
be no assurance, however, that the Company's lender will agree to
restructure such arrangements or, if it does not, that suitable equity or
debt financing will be available. Failure to restructure outstanding debt
or make alternative financing arrangements, or both, could have a
materially adverse effect on the Company's liquidity.
27
<PAGE>
Capital Resources:
At November 30, 1995, the Company has no material purchase commitments for
capital equipment. Additions and/or replacements of plant and equipment are
generally provided through working capital or a trade-in for down payment
resources, and a capital lease of long-term purchase note secured by the
related equipment purchased.
Inflation:
Inflation has not had a significant impact on the Company's operations in
the past two years, and is not expected to have a significant impact in the
foreseeable future.
28
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PCT HOLDINGS, INC.
Date: May 8, 1996 DONALD A. WRIGHT
-----------------------------------------
Donald A. Wright, President & CEO
Date: May 8, 1996 NICK A. GERDE
-----------------------------------------
Nick A. Gerde, Vice President,
Chief Financial Officer, and Principal
Accounting Officer
29
<PAGE>
EXHIBIT INDEX
Exhibit Sequential
Number Description Page
- ------- ----------------------- ----------
27 Financial Data Schedule
30
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS OF PCT HOLDINGS, INC., AND ITS SUBSIDIARIES
FOR THE THREE-MONTH PERIOD ENDED NOVEMBER 30, 1995, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> NOV-30-1995
<CASH> 2,143,565
<SECURITIES> 0
<RECEIVABLES> 4,449,782
<ALLOWANCES> (45,207)
<INVENTORY> 6,395,476
<CURRENT-ASSETS> 13,131,467
<PP&E> 13,047,697
<DEPRECIATION> (3,095,092)
<TOTAL-ASSETS> 26,821,438
<CURRENT-LIABILITIES> 8,537,855
<BONDS> 5,796,757
0
0
<COMMON> 17,528,442
<OTHER-SE> (6,148,356)
<TOTAL-LIABILITY-AND-EQUITY> 26,821,438
<SALES> 3,674,762
<TOTAL-REVENUES> 3,674,762
<CGS> 2,990,826
<TOTAL-COSTS> 1,013,835
<OTHER-EXPENSES> 11
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61,818
<INCOME-PRETAX> (391,706)
<INCOME-TAX> 0
<INCOME-CONTINUING> (391,706)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (391,706)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
